Mining News

A new demand for sand that’s grand

When most people think about mining, they think about gold, diamonds, potash, coal, iron, and other metals and minerals. What they probably don’t think about is
sand. Apparently, they should - the growing use of hydraulic fracturing has sharply expanded the demand for sand, which is integral to the process, where pressurized
water and sand are pumped into shale and other oil & gas bearing formations to allow the hydrocarbons to flow.

An article in the Wall Street Journal documents the increasing demand for sand used in the production of natural gas:

Energy companies are expected to use 56.3 billion pounds of sand this year, blasting it down oil and natural gas wells to help crack rocks and allow fuel
to flow out. Sand use has increased 25% since 2011, according to the consulting firm PacWest, which expects a further 20% rise over the next two
years.

And sand mining companies are prospering:

And the stocks of publicly traded companies that deal in sand have soared. Shares of Houston-based Hi-Crush Partners have jumped 59% since it began
trading in August 2012. Shares of U.S. Silica Holdings Inc., based in Frederick, Md., have doubled since it went public in 2012, giving it a stock market value of $1.9
billion.

The article has a wealth of details about the use of sand in hydraulic fracturing, pointing out that it takes 25 rail cars worth of sand to “frack” a well. And that adds
up to a lot of business for railways as well:

Railroad operators are carrying boxcars filled with sand to shale fields including the Permian Basin of West Texas and New Mexico, the Bakken formation of North
Dakota and the Marcellus Shale of Pennsylvania.

While some of these places might seem to have plenty of sand of their own available, many fracking outfits prefer Wisconsin white sand, which is bigger and has
rounder grains better suited for holding open larger pathways.

Union Pacific Railroad shipped 94,000 railcars of frack sand in the first half of the year—a 20% increase over the same period of 2012.
Canadian National Railway Co. is spending $68 million over three years to upgrade and restore more than 100 miles of track in Wisconsin so it can boost sand
shipments out of state.

U.S. Silica and BNSF Railroad are building a sand distribution hub south of San Antonio, at the edge of the oil-rich Eagle Ford shale. U.S. Silica will ship more than 1
billion pounds of sand each year there from Ottawa, Ill., 85 miles southwest of Chicago, and Sparta, Wis., about 250 miles to the north.

In a year that’s been hard on the mining sector, it’s nice to see a bright spot appearing as 2013 draws to a close. Read the whole thing here.